Tag Archives: process
Improve Your Accounting and Sales End-to-End Process with Dynamics 365 CRM and Dynamics 365 Business Central
Allied Modular Building Systems is a company that has provided specialized modular structures like high-tech robot enclosures, audio sound booths, and portable office spaces to some of the largest companies in the world. Recently, they’ve experienced rapid growth which their outdated and disconnected on-premise solutions couldn’t keep up. This resulted in downtime and a slow response to customer needs.
The company knew it needed to update its systems in order to create faster processes. With some Microsoft solutions already in place, they implemented to bridge the gap between their additional business applications. : “Dynamics 365 has been really powerful for us over the years. Our estimating and sales departments use the Sales app all the through to win or lose. When an order begins, we promote it over to Business Central. That integration is a huge time save because we don’t have to duplicate the information in two different places. All the sales data can flow with the order. We have saved about 19 percent of the cost per order by making this change–it’s one of the reasons we decided to implement this solution.”
With a simpler IT infrastructure and faster way to track customer information and opportunities, Allied Modular has created a seamless project flow, reduced IT costs, and connected teams.
Simplifying IT processes and creating a smoother flow is just one way hundreds of companies throughout the world are using Business Central and Dynamics 365 to improve end-to-end processes. Others have used the solution for more flexibility in managing data centers, to scale up or down, and to eliminate data silos.
Below, we’ll discuss what you can do with a Dynamics 365 and Business Central integration and how it will benefit your end-to-end processes.
Why Separate These Systems?
We at JourneyTEAM have been asked several times why rather than joined together.
Our answer is that these systems are separated, yet integrated. They work in conjunction with each other to provide organizations with detailed data, more flexibility, and a centralized marketing and sales planning and operations system. Small startups, acquisitions, or mergers can especially benefit from having two separate systems.
Let’s dive into this a little more.
Keeps Data Accurate Throughout the Entire Lifecycle
When you login to your marketing system to review data, you know that some of the data you’ve gathered is duplicate or incorrect. However, this isn’t cause for concern as this data will be verified and cleaned later on. Having false or duplicate data in your operating system is concerning because you make decisions based on the data stored here and you need it to be accurate. This is why it’s crucial to have all data verified before it reaches the accounting system. That way, when you login to your operating system, only real and precise vendor data is displayed, helping you to make faster, more educated decisions.
Flexibility
The cloud has enabled businesses to gather information from dozens of sources like eBay, Amazon, Shopify, WooCommerce, Magento, and more. Dynamics 365, a powerful CRM system, has the flexibility to gather that data from the different sources, identify similar data from each source, and feed it to the ERP.
Centralizes Marketing and Sales Planning and Operations
If you’re thinking that your sales inventory and operations planning systems are running just fine separately, you may be right. However, there are a number of benefits to centralizing these two systems. One of the biggest benefits is that your sales and marketing would work in tandem with each other.
A central SIOP system allows marketing and sales staff to identify opportunities and act on them from a single dashboard. For example, if your sales team has just completed a sale of several pieces of construction equipment. Your marketing team would be instantly alerted to this sale, giving them the chance to push service contracts, preventative plans, or other equipment. Not only does this help you increase profits, but also drives faster decisions.
Another benefit to a centralized SIOP is that your entire company would have access to this informative data. These insights can be accessed at any time, anywhere.
Finally, large complex businesses who want to mask the true complexity of their organization can do so with a centralized SIOP as customers would only see a single, seamless process.
Saves Time on Startup, Acquisition, or Merger Projects
Gone are the days where you had to go through the interruption of an ERP migration when you had a new startup, acquisition, or merger project. With Dynamics 365 and Business Central, you can use one of the existing connectors to integrate the two systems with ease.
Designed to Work for You
If you’ve read this information and thought: “I’m just a simple, low-volume startup–this all seems like overkill or isn’t for me”, think again. The best part about l is that they can be used in virtually any organization thanks to its flexible, agile tools.
We’ll take a closer look at each solution’s features and how they can benefit your end-to-end processes next.
Both and Dynamics 365 feature a Power BI tool. This cloud-based reporting and analytics platform connects users to data stored throughout the organization through detailed reports and dashboards that provide deeper insight into various business teams and processes.
For example, if your business relies on a currency feed service, Power BI will aggregate all the data within your inventory and present it in an easy-to-read report or dashboard. You can even toggle between different views depending on what you’re looking for. Sales managers can look at how many items are stored at a specific warehouse location and inventory managers can ensure parts remain stocked or which locations are running low on certain items.
You can do all this and more from the ERP system, meaning you don’t have to build an integration between two systems.
As soon as the connectors in Dynamics 365 are turned on, they begin working with your CRM system.
Once this integration is established, it goes to work aligning data in your inventory so you can view this data in an easy to read, simple way.
If you’re a smaller company or a startup, this low-volume, simple integration is a perfect introduction to Microsoft solutions. However, it’s important to note that if you’ve customized Business Central or your CRM system, this integration may be difficult or impossible as there’s little room for customization between the two systems.
File Export/Import Method
This is one of the most frequently used tools within Dynamics 365. Using this tool, you can import your master data from a CSV or Excel file and also use other features such as:
- Include or exclude certain columns from the spreadsheet.
- Automate tasks.
- Customize fields for the source and target side.
- Create sales invoices that feature headers and lines.
This tool is a great tool to use if you’re wanting to integrate with other tools. The import/export method allows you to first create the design for the field and table mapping before you export the data from the system into the spreadsheet. You can then drop this spreadsheet into Dynamics 365 and import the data.
Power Automate
As part of the Office 365 subscription, Dynamics 365 features the Power Automate tool. This tool allows users to create automated workflows between various systems to save time, reduce costs, gather data, receive notifications, and more. Power Automate can easily integrate with your favorite apps like other Microsoft Stack solutions, Dropbox, Trello, and popular social media sites like Instagram, Twitter, and Facebook.
The tool also allows you to:
- Automate business processes or tasks
- Send reminders about tasks.
- Connect to hundreds of public APIs or data sources.
- Reduce time spent on repetitive tasks.
- Protect sensitive data.
For example, illimity, a cloud-native bank in Italy, used Power Automate to simplify, streamline, and automate a slow, inefficient approvals process. Today, the company has saved a significant amount of time in customer requests using the features within Power Automate.
Dynamics 365 API Integration
To help you gather data from each of your applications, use the direct API integration in Dynamics 365. Setting this integration takes very little time, but is harder and more expensive to maintain. However, the expense is definitely worth it thanks to the speed and efficiency that is unrivaled in Power Automate.
The Benefits of Microsoft
Why go with Microsoft and not with another system? There are hundreds of to choose from, so what makes Microsoft the best? The answer is flexibility. Few other systems provide the flexibility and agility that Business Central and Dynamics 365 do. From small, low-volume startups to large, complex, high-volume businesses, these systems can be configured to support your unique business processes. Streamlined, efficient processes lead to better customer services, more targeted marketing, and more effective sales strategies.
In addition to these benefits, Dynamics 365 and Business Central can help you:
- Gain deeper insight into customer data using powerful, versatile tools.
- Increase business as both these systems work together to analyze data and find promising leads or sales opportunities.
- Provide your entire organization with fast, easy access to valuable data insights by storing data in one place.
- Improve both customer retention and satisfaction by helping your sales, marketing, or customer service team respond more quickly and appropriately to their needs.
Microsoft prides themselves on creating solutions that are designed to work for you, making the list of benefits endless. Implementing just one of these solutions can be the catalyst to implementing others, helping you to further advance and improve your business processes.
Enjoy Customized Support from a Microsoft Partner
When you need assistance with either Business Central or Dynamics 365, contact JourneyTEAM, a Microsoft Gold Partner. With the help of our talented team of professionals who are well-versed in Microsoft solutions, we’ll help you get these solutions up and running as quickly as possible. Whether you need a lot of support or a little, we’re happy to provide it. Talk to a JourneyTEAM representative today!
JourneyTEAM was recently awarded and the Microsoft Eagle Crystal trophy as a top 5 partner for Dynamics 365 Business Central software implementations. Our team has a proven track record with successful Microsoft technology implementations and wants you to get the most out of your organization’s intranet system. Consolidating your communication, collaboration, and productivity platform with Microsoft will save time and money for your organization.!
Article by: Dave Bollard – Chief Marketing Officer | 801-436-6636
JourneyTEAM is an award-winning consulting firm with proven technology and measurable results. They take Microsoft products; Dynamics 365, SharePoint intranet, Office 365, Azure, CRM, GP, NAV, SL, AX, and modify them to work for you. The team has expert level, Microsoft Gold certified consultants that dive deep into the dynamics of your organization and solve complex issues. They have solutions for sales, marketing, productivity, collaboration, analytics, accounting, security and more.
The Dynamics CRM Sales Process: Everything You Need to Know
For any business, small or large, success depends entirely on sales figures. And no matter how great the product is or how much was spent on marketing, the primary goal for any organization is to increase revenue. is designed to support the sales process from beginning to end – right from acquiring a new lead through the close of a sale. By relying on a set of steps and actions, it enables you to close more deals and increase revenue.
What is the Goal of the Dynamics CRM Sales Process?
The sales process aims to generate potential sales opportunities and nurture leads for businesses. It is designed to support the sales process from acquiring a new lead through the close of a sale and to generate accurate sales forecasting. By automating and optimizing several stages, it helps streamline the sales process while improving the rate of closure. It also helps track and measure every sales activity and understand every number and component of the sales funnel in order to grow income. Using the Dynamics CRM sales process, you can zero-in on the right leads and build an extraordinary sales pipeline.
Microsoft Dynamics CRM Sales Process Life Cycle
The Dynamics CRM sales process life cycle provides a streamlined process to generate potential sales opportunities for your business. Since Dynamics CRM stores all of the information of new leads, it helps track follow-up communication including phone calls, emails, and appointments, and aids in qualifying leads into accounts and opportunities. Here’s a look at the Dynamics CRM sales process life cycle:
1. Lead Capture
A lead represents any person or organization that your organization might have the potential to do business with. Leads are generally captured through online or offline advertising, trade shows, direct communication, and other marketing campaigns. In Dynamics CRM, in order to create an entry in the system, you need to enter the name of the lead under the “lead entity” tab and mention information about the lead under the “topic” tab. Once a lead has been captured, follow up activities that include emails, phone calls, and appointments need to be conducted to capture more information about the lead and to proceed to the next stage of lead qualification.
2. Account Creation
Accounts are entities with which your organization has a relationship. In Dynamics CRM, this is where all account information is stored in the database. Accounts can include prospects, vendors, business partners, and more.
3. Contact Setup
Contacts are individuals with whom your organization has a relationship; these are generally customers or contacts of customers. Contacts are often related to an account, but certain organizations and businesses may serve or sell to individual consumers as well. Since contacts in the Dynamics CRM integrate with contacts in Microsoft Outlook, any contact you set up or any change you make to the contact record fields in will automatically reflect in Outlook depending on the synchronization settings.
4. Opportunity Management
Opportunities in Dynamics CRM represent potential sales for a specific customer; when an opportunity is created, it gets included in the sales pipeline. An opportunity is said to be won when a customer agrees with the quotation; however, when a customer disagrees, the opportunity is lost and the sales life cycle ends. Opportunities allow you to measure the success of marketing efforts by tracking sales back to the original lead source and source campaign. When an opportunity is lost, reasons for the loss can be tracked.
5. Product Catalog
Dynamics CRM enables you to maintain a product catalog with multiple customizable prices and discount lists for all of the business’ needs. You can create quotes, invoices, and orders directly from Dynamics CRM and include various factors including territory-based pricing, discount lists, product or price bundles, and more. You can also list product relationships to facilitate product substitutions, highlight cross-sell and up-sell opportunities, as well as mention write-in discounts.
6. Quote Management
A quote contains the list of products or services with a defined price list and discounts the customer is interested in. After reviewing, the customer can either agree or disagree to place the order. In Dynamics CRM, you can create quotes in two ways: from an opportunity using system-calculated pricing, or as a new quote. Multiple quotes can be created from one opportunity to include special pricing offers.
7. Order Management
An Order is a confirmation of a sale that is to be invoiced and placed for further processing in terms of logistics. Since they are accepted quotes, they document what specific products or services the customer is buying. In Dynamics CRM, orders can be created by selecting the “Create order” button on an active quote.
8. Invoice Management
Invoices represent the final stage of the sales cycle. After an order is placed successfully, an invoice is generated in the Dynamics CRM system. You can either create an invoice directly from a specific order screen or navigate to the invoice section and select a new invoice. You can create more than one invoice for an opportunity or an order.
9. Sales Business Process
Every organization follows a specified business process to capture sales information and close a sale. The Dynamics CRM business process flow enables users to follow the guided process without any confusion. You can either choose the out-of-the-box business process flow or custom define your own in accordance with your sales process life cycle.
How Can Your Business Optimize the CRM Sales Process?
Dynamics CRM is intended to help boost your sales by guiding you through the journey from prospect to customer, as well as helping marketers to create lead generation campaigns and monitor where leads are coming from. Here are 5 ways your business can and the sales process using Dynamics CRM:
1. Goal Management
Microsoft Dynamics CRM benchmarks performances against KPIs to inform sales directors, managers, and other sales professionals with easy to follow charts and reports for real-time monitoring of individual and team progress towards sales goals.
2. New Sales Opportunities
Using Dynamics CRM, you can take advantage of the data, and segment it based on user behavior such as the pages they have visited, or the products they are interested in. This way, you can identify new sales opportunities with ease.
3. Sales Dashboards
Dynamics CRM provides live reporting sales dashboards, which enable you to monitor active leads and sales opportunities and react with timely, and informed decision-making. These dashboards, which include charts, statistics, sales metrics, and KPI graphics, provide real-time visibility that can help raise productivity, increase sales, improve operational efficiency, and optimize business.
4. 360-Degree Customer View
Dynamics CRM provides full information about sales data to anyone who needs it – from sales and marketing to finance and management. You can align your sales activities with your business and achieve better sales. By leveraging contextual information available in Dynamics CRM, you can also create up-sell and cross-sell campaigns within minutes.
5. Mobile Sales
Dynamics CRM’s mobile app gives field sales teams the ability to work efficiently on-the-go. With any-time access to updated sales information, you can make sure they stay in the loop. Mobile CRM helps sales agents update CRM data in real-time, even in locations with intermittent or no internet connectivity.
Improve Sales Efficiency
A well-defined sales process is key to successfully managing your sales staff as well as your sales pipeline. Successful companies are far more likely to have a formal and structured sales process in place, that increases the chances and efficiency of sales, ultimately increasing revenue in the long run. The Dynamics CRM sales process aims to prioritize, collaborate, and organize sales activities in an efficient manner to directly impact sales pipelines and business results.
Using the , you can move from one stage of the sales process to the next with ease, set the right goals using built-in dashboards, and get that help you close more deals. You can drive more consistent sales interactions with leads and prospects, improve sales efficiency, and provide your business organization the competitive advantage necessary for success in today’s fast-paced, ever-changing environment.
Learn more about how to properly leverage to improve your sales processes by contacting an expert at Synoptek.
Sales Process for Microsoft Dynamics 365 CRM
Sales Process Accelerators for Microsoft Dynamics 365 CRM are add-on solutions that provide best-practice based sales process and automation to the sales areas of Dynamics 365 CRM. Sales Accelerators will solve several significant challenges:
- Improve User Adoption
- Provide Consistency in your Sales Processes
- Assure Best Practices are followed
- Provide detailed sales process analysis
Our leadership team has over 17 years of experience helping businesses evaluate, plan, implement and support Microsoft Dynamics 365 CRM solutions. Often we are brought in to help with a failed implementation. We observed a key underlying reason for failure – lack of business and particularly sales process. Business process is as important if not more important than the CRM software itself however there is no pre-built, out-of-box sales process in most CRM systems including Dynamics 365 CRM. Hiring a consultant to build this needed business process into CRM is cost-prohibitive in many cases.
To solve this significant challenge our team worked with several top national sales experts to build our sales accelerators. We also incorporated input from clients of all sizes and industries over several years to assure our accelerators work out-of-box for most businesses.
Sales Accelerators are available for Lead, Opportunity and Account Management areas of Microsoft Dynamics 365 CRM.
Sales Process for Microsoft Dynamics 365 CRM – Watch a Video Overview
About the Author: David Buggy is a veteran of the CRM industry with 18 years of experience helping businesses transform by leveraging Customer Relationship Management technology. He has over 16 years of experience with Microsoft Dynamics CRM/365 and has helped hundreds of businesses plan, implement and support CRM initiatives. To reach David or call 844.8.STRAVA (844.878.7282) To learn more about Strava Technology Group visit www.stravatechgroup.com
Before You Buy Dynamics 365, SalesForce, Zoho, or P2xRM, Get a Process Flow Diagram
Microsoft Dynamics 365 is a tool. So is SalesForce, Zoho, and P2xRM. A tool is only effective when it is used properly, according to directions, and for the purpose for which it was designed. But even the best tools will not make your work successful if you don’t follow a blueprint.
Whether you are considering Microsoft Dynamics 365/CRM, SalesForce, Zoho, or for your business, your best chance of achieving what you want will come with a plan based on a . The diagram will function as a roadmap, or a blueprint, to lead you through processes to your destination.
At P2 Automation, part of our , which we perform for every CRM project, is a Process Flow diagram.
This diagram is a chart you can look at to see the workflow processes necessary for conducting business within your organization. The above graphic illustrates a complicated Process Flow Diagram that we recently designed during the initial stages of a Microsoft Dynamics 365 implementation.
You can see precisely how this organization progresses from initial lead to customer-needs evaluation through implementation, training, and continuing support.
We do charge our customers for the of their projects, but the groundwork covered is invaluable. Research, problem-solving, and recommendations that emerge from this phase become valuable assets. Should you decide not to complete your CRM implementation project with P2 Automation, you’ll still have this blueprint to guide your selection of the tool of your choice.
It is worth noting that most of the avoidable extra expenses in a project come from additions and change orders that could have been prevented by having a well thought out blueprint to follow. Making changes on a diagram is a lot easier and less costly than trying to make changes mid-implementation.
Before you proceed with your Dynamics 365, SalesForce, or Zoho project, our experts at P2 Automation to and start laying out your process flow.
By P2 Automation,
Now visualize Business Process Flow in the form of Kanban Board and categorize rows for better data clarity in Dynamics 365 CRM & PowerApps
Growth of an organization depends upon the collective effort put together by all the departments; be it Sales, Marketing, Finance or Accounts. This effort includes pursuing each and every business process diligently and maintaining decorum while doing it. In order to pursue these processes, one needs to know about it and understand it. Once it is done, all you have to do is prioritize the work and follow the processes to the T.
Kanban Board – our latest visualization tool which provides Kanban like view of Dynamics 365 CRM records has recently released two new features which will help you achieve the above feat effortlessly. These new features are as follows:
- Business Process Flow
- Row Grouping
Business Process Flow (BPF)
This new feature will provide you simplistic view of business processes. It will organize and categorize the records of an entity as per the Business Process Flow stages of that entity in a Kanban View. For example, let’s say you have enabled BPF function for Opportunity entity. Now, the records will be organized in Kanban view according to the BPF associated with Opportunity entity in Dynamics 365 CRM and lanes would be categorized by the BPF stages i.e. Qualify – Develop – Propose – Close. You will get a clear view of how many of your records are in which stage of business process and accordingly you can come up with action plan to close all the pending deals.
Row Grouping
Initially, in Kanban Board records were categorized in lanes but now you can categorize the records in rows also. With this added feature, you can easily group records in a row based on any field value which will further help you to take stock of the situation, make plans and implement actions accordingly. For example, if you enable this feature for Case entity on the basis of Priority attribute, then you will get the Kanban View of all records in case entity grouped in row on the basis of priority – High, Normal and Low. Further, you can also drag and drop these records from one row to another and update its status. This grouping will give you clarity about the tasks that needs your immediate attention and help you to take actions accordingly.
You can explore these new features by downloading the solution from our for a trial period of 15 days.
If you have any doubts or want to give suggestions about our product then feel free to mail us at crm@inogic.com
Until then – Stay safe, Stay healthy!
Understanding Your Business Process
It’s simple. For a business system implementation to succeed, the focus (from the start!) must be on how the system supports, integrates with and enhances an organization’s business processes.
This statement supposes, perhaps ambitiously, that the business already has strongly defined business processes.
CRM Implementations Require Standardization
For many organizations, chaos often rules the day – or at the very least hobbles business growth – even after the best implementations.
Implementation success stands or falls almost entirely on the standardization of processes within the enterprise. A single department, team or individual going rogue on a process or best practice will inevitably create chaos. And if not corrected, the negative effects and aftermath are only compounded post-implementation.
Don’t fool yourself. Implementing new technology isn’t a guarantee that business will grow and processes will improve. Enterprise-wide adherence and commitment to user adoption are essential in successful implementations.
While new business systems can truly be a game changer, lack of user adoption can and will negate the technologies potential, making the expense of implementation almost impossible to justify.
PROCESS STANDARDIZATION & BEST PRACTICES
The steps to implementation success are actually and remarkably straightforward – and begin long before the decision to start an implementation is made.
CRM experts are simply not doing their jobs if all they do is sell you the technology for your implementation. The best CRM consultants comprehensively analyze business operations, identify best practices, then standardize these best practices across the enterprise.
Standardization is truly the backbone of successful implementations. And most successful businesses have a tight rein on their processes with a deep understanding of what makes them work.
SUCCESSFUL CRM IMPLEMENTATIONS: STANDARDIZATION MEETS TECHNOLOGY
It is in the deep understanding of – and adherence to – organizational processes that enables the successful integration of a new business system like Dynamics CRM. To maximize the benefit of a CRM implementation to your business, it is equally important that you possess both a deep understanding and commitment to your processes and an equally deep understanding of the pretty remarkable bells and whistles of Dynamics CRM.
Processes, best practices and ultimately successful implementations are reliant on a high-level dedication and support from the top levels of management. And no matter what anyone tries to tell you or sell you, successful implementation of Dynamics CRM always begins with process.
For more details about having a successful CRM implementation with the proper focus on Business Process, call Empellor CRM at 303-482-2909 or visit our .
To More Efficiently Process IoT Data, Move Your Wheelbarrow Closer to Where You Dig
Some of the easiest, most powerful lessons we learn when we are young seem obvious—usually after we learn them. My dad taught me one the first year he let me help him plant his garden when I was a kid. Early one spring, he gave me a shovel and a wheelbarrow and said, “Go dig a row of holes and dump all the dirt in the wheelbarrow.”
So, naturally, I placed the wheelbarrow at the far edge of the garden, put my shovel in the ground at the opposite end, walked the scooped dirt all the way over to the wheelbarrow, and then walked all the way back again to my row of holes.
My dad watched me do this a few times (laughing under his breath I’m sure) until he finally said, “Hey Kevin, don’t you think you’d get the job done faster if you moved your wheelbarrow closer to your holes?” Brilliant.
Lost opportunities due to latency in IoT processing
Believe it or not, this simple lesson can also be applied to the processing of data from your IoT devices. TIBCO—an innovator in microservices tooling—had the opportunity to present this lesson at this year’s Microservices World event as part of a breakout session.
The modern version of the lesson goes like this: Typically, IoT devices are connected directly to an edge device within a local network. The IoT devices send data they collect through the edge devices and up to an IoT platform hosted within a private or public cloud, such as TIBCO Cloud. This platform processes the data—collecting, filtering, and analyzing so that appropriate action is taken. So in network terms, the IoT devices are all close to each other. But, like my wheelbarrow and the garden holes I had dug, this topology puts quite a bit of distance between IoT devices and the IoT platform.
The effect is a high amount of latency between the time data is collected by IoT devices and the time it is acted upon—which can translate into lost opportunities if data isn’t acted upon when it is of highest value.
How to decrease latency in IoT processing
It would seem to make sense then, as my dad would suggest, to move the processing of your IoT data closer to your IoT devices—such as on your edge devices. However, edge devices have limited compute resources (i.e. memory), which in turn limits the size (and functionality) of applications that can be deployed to them when written in traditional languages such as Java. So instead of a wheelbarrow, imagine my dad had given me a teacup.
That’s where the open-sourced Project Flogo can help. It enables developers to visually create event-driven microservices and functions and, most importantly, it builds application executables that are up to 50x smaller than those written in Java—perfectly scaled-down for (teacup-sized) edge devices and new types of serverless environments such as Function-as-a-Services (FaaS). Although small in size, these applications can embed automated decision making with contextual rules and/or machine learning right into the edge device. With Project Flogo, you can process your IoT data more quickly and cost-effectively on edge devices (which are much closer to the source) rather than the cloud. You can see how through a series of short videos.
TIBCO has commercialized Project Flogo within TIBCO Cloud Integration, our market-leading enterprise Integration Platform-as-a-Service (iPaaS). TIBCO Cloud Integration not only includes commercial technical support and a wide variety of enterprise connectors, it also includes many productivity features that simplify and accelerate event-driven application development. You can try TIBCO Cloud Integration for a limited time to create applications in a development environment within TIBCO Cloud at no charge.
When you have the right tools, and you move them close to where work is done, you can respond with speed to valuable digital moments. And you can plant gardens with your dad too!
ASU 2018-15 Simplifies the Process for Accounting for Cloud Computing Expenses
Posted by Christopher Miller, Distinguished Solution Specialist
New FASB standard offers guidance on accounting for cloud computing license costs and implementations.
I am frequently contacted by customers and our internal team about how to account for NetSuite costs. As cloud computing became more popular, businesses took different approaches to how they accounted for it on their financial statements. A few of the popular ideas were:
- Treat a cloud computing arrangement as a fixed asset and depreciate it. Capitalize everything.
- Present the contract as prepaid and amortize it as an intangible asset.
- Amortize the contract as an expense and capitalize all of the implementation costs.
- Reference the contract to lease accounting standards and follow those as an analogy for cloud computing.
- Treat the cloud computing arrangement as internally developed software.
Each of these ideas had some merit. However, as the percentage of businesses using cloud products increased, the FASB and other standard setters realized that the “diversity” in practice was growing too large.
So, in 2015, the FASB issued ASU No. 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” to simplify to process. The goal was to help a business determine what kind of contract their arrangement included.
The key determination was to help a user know if their arrangement contained a software license or not. Using the guidance under ASC 985-605, customers are required to determine if their cloud arrangement contains a software license. If the answer is yes, then treat the contract as an internal use software intangible under ASC 350-40. If no, then account for the arrangement as a service contract.
The release of No. 2015-05 clarified several of the key questions presented above. If the cloud computing arrangement included a software license, then the contract was treated as internal-use software. This allowed the purchaser to capitalize the license and related implementation costs. It also clarified that when an arrangement didn’t have a software license embedded, that it was a service contract and should be treated as an operating expense. This clarification put an end to treating service contracts as fixed assets, etc.
However, ASU 2015-5 didn’t determine the process for handling the implementation costs of a service contract. Many of the same questions existed, such as whether you can capitalize implementation costs, or must they all be expensed?
To clarify the process of handling service contract implementations, FASB issued ASU No. 2018-14, effective for all filers after Dec 15, 2019.
Key Provision 1 – Apply Internal Use Software Guidance
When entering into a cloud computing contract that is a service contract, entities will now apply the same guidance toward implementation costs that are used for internal use software. Here are the key guidelines to be aware of when applying this new guidance:
- Project costs to purchase, develop or install the software generally can be capitalized.
- Activities related to testing, customization, configuration and scripting can be capitalized.
- Training and data conversion costs are to be expensed as incurred.
- These costs can be both internal and external, such as payroll, contractors and travel expenses.
Key considerations here are to consider how you define the different terms and the quality of your project timekeeping/management to identify the type of work performed.
Amortization of Implementation Costs
ASU 2018-15 states that implementation costs should be amortized over the term of the associated cloud computing arrangement service on a straight-line basis. In addition, it states that the usage rate (number of transactions, users, data throughput) should not be used as a basis for amortization.
In section 350-40-35-14 the guidance states additional periods to be included in the amortization period:
- An entity (customer) shall determine the term of the hosting arrangement that is a service contract as the fixed noncancellable term of the hosting arrangement plus all of the following:
- Periods covered by an option to extend the hosting arrangement if the entity (customer) is reasonably certain to exercise that option
- Periods covered by an option to terminate the hosting arrangement if the entity (customer) is reasonably certain not to exercise that option
- Periods covered by an option to extend (or not to terminate) the hosting arrangement in which exercise of the option is controlled by the vendor.
- When reassessing the amortization term, an entity shall consider the following to reassess the term:
- Obsolescence
- Technology
- Competition
- Other economic factors
- Rapid changes that may be occurring in the development of hosting arrangements or hosted software
Presentation
The new ASU makes a few critical changes to the presentation of cloud service contracts. A few highlights include:
- 350-40-45-2 An entity shall present the capitalized implementation costs described in paragraph 350-40-25-18 in the same line item in the statement of financial position that a prepayment of the fees for the associated hosting arrangement would be presented.
- 350-40-45-1 An entity shall present the amortization of implementation costs described in paragraph 350-40-35-13 in the same line item in the statement of income as the expense for fees for the associated hosting arrangement.
- 350-40-45-3 An entity shall classify the cash flows from capitalized implementation costs described in paragraph 350-40-25-18 in the same manner as the cash flows for the fees for the associated hosting arrangement.
The key takeaway for presentation in the new guidance is that no costs associated with a CCA Service Contract should be treated as depreciation or amortization and should all be included in operating income.
Disclosure Requirements
There are a few key disclosures required from the new ASU. Specifically they are:
- The nature of its arrangements for cloud computing.
- Any amortization expenses for the period
- Major classes of implementation costs that have been capitalized
- Accumulated amortization of the implementation costs
Conclusion
With the release of ASU 2018-15, the way to manage cloud computing contracts has clarity. It is now a three-step process that consists of determining whether an arrangement has a software license included. Manage the implementation project and capitalize the correct costs. Lastly present the costs correctly based on the new ASU.
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